Dairy-based nutraceuticals: a Japanese perspective; Japan is a country ripe with opportunity when it comes to dairy.

There is a general impression in Western countries that the Japanese market for dairy products and dairy-based ingredients is quite small, in large part based on reports that claim that a very large majority of Asians are lactose intolerant and cannot consume dairy products. The reality for Japan, however, is that the dairy market is strong and growing year after year, and the interest in dairy-based ingredients for health-related benefits is growing as well.

Dairy Product Overview

The Ministry of Health, Labor, and Welfare (MHLW) in Japan conducts an annual nutrition survey in Japan and publishes (in Japanese) a report titled "The National Nutrition Survey in Japan." Food consumption data are collected, including information on milk and dairy products. The most recent survey using 2002 data indicates that average dairy product consumption in Japan is approximately 167 grams per day, with a high of 334 grams per day in the 7-14 age group and a low of 124 grams per day in the 20-29 age group. Dairy product consumption as a percentage of total energy intake has nearly doubled in Japan since 1975 to over 5% of calories in 2002. Milk and dairy products represented nearly 10% of fat intake in 2002, almost a 50% increase since the original 1975 survey.

Fresh Milk. The fresh milk market is flat primarily because of the declining birth rate in Japan and the rapid aging of the population. Japanscan Food Industry Bulletin reports trend data for drinking milk, milk drinks (milk for use in milk products) and "other" (milk for use in other products, such as ready-to-drink coffee and teas, for example). All three sub-categories have registered flat growth since 1990.

Yogurt. The trends in yogurt production since 1990 are much more positive. Production has more than doubled, and the growing yogurt market has become an exciting source of creative new product, ingredient and packaging ideas in recent years. Growth has been strongest in the soft (fruit) yogurt category, which has surpassed both drinking and solid set yogurt in sales.

Cheese. The cheese category is another dairy success story in Japan, particularly the category of natural cheese for direct consumption. This category has increased over fifteen-fold since 1975 and is now a larger category than processed cheese. This is an indication of changing tastes of Japanese consumers, including the growing dominance of imports in the natural cheese category, primarily from Australia and New Zealand.

The milk and dairy products industry in Japan until recently was considered very stable and quite conservative, dominated by Meiji Dairies, Morinaga Milk Industry  and Snow Brand Milk Products (and Yakult Honsha for yogurt and lactic acid bacteria products). However, the corporate scandal and near collapse of Snow Brand Milk Products resulted in major realignments in the industry, partly taken up by the formation of a new company, Nippon Milk Community, in 2003. Snow Brand is still active in the market, but the corporate spin-offs and new partner relationships have been complex and difficult to follow.

FOSHU (Foods for Specified Health Uses) Dairy Products and Ingredients

FOSHU Products. A review of the last one hundred (of over more than 500 total) MHLW-approved FOSHU products since January 2004 provides a perspective on the continued importance of dairy-based products in the development of new FOSHU products. Nine of the products approved were either yogurts (6) or lactic acid bacteria drinks (3). This actually represents a slowdown in terms of the percentage of FOSHU approvals in yogurt and lactic acid beverage form compared to prior percentages, although the prior approvals included nearly the entire line of Yakult Honsha's yogurts and lactic acid beverages.

FOSHU Ingredients. For the nine new products, five included either lactic acid or bifidus bacteria as the functional ingredient for gut health. Another two used lactotripeptide for blood pressure reduction, one used GABA (gamma aminobutyric acid), also for blood pressure lowering, and the final product used indigestible dextrin for blood sugar control. With the exception of the lactotripeptide products, these FOSHU approvals represent the use of non-dairy functional ingredients in dairy-based products.

Dairy-based functional ingredients are also in wide use in the FOSHU category in non-dairy products. Examples include lactulose (lacto-fructo oligo-saccharide) in a soft drink for gut health, casein dodecapeptide in a soft drink for blood pressure lowering, casein dipeptide in a soft drink for blood pressure lowering, CPP-ACP (milk protein hydrolysate) in a chewing gum for healthy teeth, and "substances produced by the fermentation of whey by propionic bacteria" in a tablet candy for gut health.

In some of these examples, the company obtaining the FOSHU product approval is also the manufacturer of the functional ingredient used in the product. It is just as common, however, if not more so, that the functional ingredient has been produced by a manufacturer with no interest in branded retail products. The indigestible dextrin dietary fiber functional ingredient is the most popular example of this approach to the FOSHU marketplace in Japan.

Non-FOSHU Dairy Products and Ingredients

The non-FOSHU applications for dairy-based products and ingredients are even more extensive than the FOSHU examples, since it is possible to incorporate the same kinds of functional ingredients into the same kinds of products as long as on-label health claims are not made. A review of the last two issues of Japanscan Food Industry Bulletin in the "Functional Milk Products" category is revealing in this regard.

Milk and dairy products with functional ingredients recently announced for introduction in Japan include:

* Drinking yogurt with CoQ10 for anti-aging and L. casei for gut health

* Lactic acid bacteria drink with bifidobacteria and L. casei for gut health and magnesium for improved calcium absorption

* Lactic acid bacteria drink with collagen and ceramide for skin health

* Yogurt with L. casei and bifidogenic fiber for gut health

* Yogurt with a probiotic bacteria and inulin as a prebiotic fiber source for gut health

* Milk drink with DHA (docosa-hexaenoic acid), calcium and vitamin E

* Yogurt with soy milk and soy isoflavones 

* Yogurt with perilla extract for pollen allergy relief

* Milk with MBP (milk basic protein), calcium and vitamin D for improved calcium absorption

In addition to these few recent examples, there is ongoing interest in Japan in whey protein isolates and concentrates and caseinates in a variety of foods, both dairy and non-dairy. Lactoferrin is an important ingredient that was introduced in a very popular yogurt a few years ago. The MBP ingredient is being used in a wide range of dairy products, not just milk. Milk calcium remains a popular source of calcium, the only mineral that is broadly deficient in the Japanese diet for both sexes and nearly all age groups. A very popular probiotic yogurt is claiming efficacy in controlling Helicobacter pylori bacteria, which is a problem for many Japanese as it relates to both oral and gut health.

Final Comments

The Japanese market is open to new dairy-based technologies from overseas. At the same time, Japan itself is ripe with partnership opportunities. Overseas companies stand to benefit from Japanese companies that have developed safe and effective dairy-based functional ingredients. Many of the dairy ingredients exhibitors at the major food trade shows in Japan are from overseas, primarily from Australia/New Zealand, North America and Europe, not other Asian countries. With the continued growth in the Japanese marketplace, particularly in the yogurt category, the opportunities will multiply in the future.

Note: Important sources of information for this article are the National Nutrition Survey in Japan, Japanscan Food Industry Bulletin published in the U.K., and the Japan Health Food and Nutrition Food Association FOSHU information.

Ron Bailey is president of California Functional Foods and has been an independent consultant for over 20 years, focusing primarily on the transfer of food technology between the U.S. and Japan. He can be reached at 165 Almond Street, Ashland, OR 97520; 541-488-3184; Fax: [phone]; E-mail: [e-mail].